Disney Boosts Dividend, Adds Fresh Face To Board

Reflecting growing confidence in Walt Disney Co.'s financial outlook, company directors on Wednesday gave shareholders an early holiday gift: their first annual dividend increase in six years.

The annual cash dividend, payable Jan. 6, was raised 14 percent from 21 cents to 24 cents a share. The move had been expected since Chief Executive Officer Michael Eisner said earlier this year he would recommend an increase. Blue chip companies such as Disney have been upping their payouts in part because Congress last year lowered the maximum tax rate on dividends to 15 percent.

The directors on Wednesday also elected Fred Langhammer, the former chief executive of cosmetics giant Estee Lauder Cos., to the board.

Langhammer's appointment marked another move by Disney directors to distance themselves from past criticism that the board was loaded with insiders and cronies of Eisner.

With the installation of Langhammer next month, nine of Disney's 12 directors will be independent. And the board said it planned to elect another independent director within the next year.

Since 2002, Disney has added to the board top executives from other big corporations, including Kmart Holding Corp. Chief Executive Officer Aylwin Lewis and Clorox Co. Chairman Robert Matschullat. Langhammer, 60, is chairman of global affairs at Estee Lauder, having stepped down as chief executive in July.

On Wednesday, Eisner cited record cash flow in 2004 for the decision to increase the dividend. He called the increase part of a company plan to return cash to investors, promising Disney will aim to continue boosting dividends in the future.

Although expected, Disney's move was welcomed by shareholders and analysts as a signal that the company is optimistic about its economic recovery.

"It's certainly a vote of confidence in the company's recent performance," said Patrick McGurn, senior vice president of Institutional Shareholder Services. "Shareholders like returns but they also like the signal its sends."

The cash payout also suggests that Disney is not likely to carry out any major capital acquisitions, said Anthony Valencia, an analyst with TCW Group in Los Angeles.

The move comes as Disney's finances and stock price continue to rebound from past sluggish performances that helped spark a stinging rebuke of Eisner at the company's annual shareholder meeting in March.

Disney last month announced it rounded out its fiscal year with a 24 percent surge in profit in the fourth quarter, fueled by gains at ESPN and a continued recovery in its theme park business.

But Disney continues struggling with its Euro Disney theme parks outside Paris, which posted its biggest annual loss in a decade and recently warned in a report that it expects continued losses.

Shares of Disney on Tuesday rose 80 cents to $27.68 on the New York Stock Exchange. The shares have gained nearly 20 percent in the past year.